From Cost Center to Value Creator

How HR and L&D make the value of their investments visible

HR and L&D continuously make investments. In training programs, coaching, software, and various development initiatives. Money is spent, often for good reasons.

The challenge emerges when leadership asks: what did we achieve with this? In many organizations, the answer remains vague. Something useful happened. Participants were satisfied. Competence probably improved.

At this point, HR and L&D investments easily appear as costs, not investments. That is why the training budget is often among the first to face cuts during cost-saving periods.

The issue is not that training or development fails to create value. The issue is credibility and the ability to demonstrate it.

Investment or cost

An investment always carries an expectation of return. It is defined in advance and tracked afterward.

When an organization invests in a new production line, for example, the benefit is not assessed by gut feeling. Capacity growth, unit cost changes, and payback period are calculated.

When the investment targets leadership training or competence development, the conversation often stays at the level of feedback. This disparity weakens the position of HR and L&D within the organization.

If HR and L&D want to influence decision-making, they must be able to speak the same language as other decision-makers. That language is measurable value.

The CFO's perspective

The CFO's role is to ensure that investments generate value for the organization. From this perspective, the following questions are essential:

•      what was the size of the investment

•      what was the intended outcome

•      was the goal achieved

•      what was the return relative to cost

These are not unreasonable demands. They are normal investment thinking.

ROI calculation in practice

ROI = (benefits − costs) / costs × 100

The formula is simple. The real challenge lies in identifying and quantifying benefits.

Direct benefits are typically easiest to measure:

•      sales growth

•      productivity improvement

•      error reduction

•      faster processes

Indirect benefits require more analysis, but they are often financially significant:

•      reduced turnover and savings in recruitment and onboarding costs

•      decreased sick leave and related productivity effects

•      increased engagement and its impact on performance and quality

Example

The total cost of a leadership training program was €50,000.

After the training, the following was observed:

• turnover in participants' teams decreased by eight percentage points

• 50 managers were responsible for an average of eight team members each, totaling 400 people

• the turnover reduction meant 32 fewer people leaving

• the cost of one person leaving was estimated at €15,000

The total impact was €480,000.

ROI = (480,000 − 50,000) / 50,000 × 100 = 860%

This is an example of a calculation that finance leadership recognizes and understands.

Methodological note

The calculation described above is based on the assumption that the observed change is related to the training. This assumption should not be made lightly.

Temporal correlation does not yet demonstrate causality. That is why effectiveness evaluation requires multiple perspectives and metrics.

Triangulation, meaning the combination of different data sources, strengthens conclusions. When operational changes, experiential assessments, and business metrics point in the same direction, the interpretation is more justified.

Equally important is honesty. If a connection cannot be demonstrated, it should not be claimed. It is one thing to state that change occurred after the training; it is another to claim it occurred because of the training.

Credibility is built on this distinction.

Multi-perspective measurement

A single metric rarely provides a sufficient picture. Effectiveness evaluation requires combining multiple perspectives:

1. Action – what people do

Process metrics, outputs, behavioral observations

2. Experience – how people perceive their competence and work

Competence assessments, engagement, satisfaction

3. Business – what happens in organizational metrics

Turnover, productivity, quality, sales

When these perspectives support each other, a credible overall picture emerges.

Strategic partnership

When HR and L&D can present analyzed results, their role in the organization changes. An operational support function begins to appear as a strategic partner.

Conversations change:

•      "According to our analysis, middle management turnover causes significant costs"

•      "The previous development initiative delivered clear financial benefit"

•      "We recommend this investment because the available data supports it"

This is a different starting point than general talk about the necessity of training.

Cultural impact

Measurement changes not just reporting, but ways of working.

Initiatives begin with goals. Development becomes purposeful. Every intervention generates learning that can be utilized in subsequent decisions.

When results have been demonstrated, trust grows. Budget discussions increasingly rely on evidence, not assumptions.

Getting started in practice

1. Choose one initiative where the goal can be clearly defined.

2. Formulate the goal in measurable terms. General development is not enough.

3. Measure the baseline and track change.

4. Report findings and learnings transparently.

5. Use accumulated knowledge in subsequent decisions.

Just a few successful cases change the tone of the conversation.

The choice

HR and L&D can continue operating in a way where the value of investments remains based on assumptions. Or they can build a role where development is seen as systematic value creation.

Measurement is not extra work. It is the tool that makes your position and impact visible.

evaluoi.ai supports HR and L&D in demonstrating effectiveness by combining scientifically grounded measurement, automated analysis, and clear reporting to support leadership decision-making.